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DeletedUser394
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The Prudent Investor
Some people are not interested in the volatility of the market. This could be based on their time horizon, or just their overall risk tolerance. Regardless of the reason, you owe yourself the gift of wealth creation.
The following are a few investment options that a cynical investor can take in order to increase their wealth.
1)[FONT="] [/FONT]Regular Savings Account
These are the safest of safest investments as they are guaranteed by the FDIC (Federal Deposit Insurance Corporation) or for Canadians the CDIC (Canadian Deposit Corporation) for up to $100,000.
You owe it to yourself to shop around for the best interest rate around. A tool like Compare Mortgage Rates | CD Rates | Credit Cards Home Equity Loans Mortgages Best Rate Calculator Bankrate.com could help you out a lot. They have an easy to use search engine that compares the interest rates of banks across the United States of America.
Remember to inquire about any fees that you might unknowingly have to pay. There’s no point picking the bank with the 4% interest rate when certain fees are involved that will diminish your interest.
2)[FONT="] [/FONT]Certificates of Deposit
CDs usually pay higher interest rates than regular savings accounts, but they come at a price. You will have to keep your money locked in into the CD, until the date of maturity.
If for whatever reason you need to access the money before the maturity date, the bank will typically take away most if not all of the interest you would have received. This is a hard reality to face if you’ve left your money in for a long time and then suddenly need to take it out.
Like regular savings accounts, a CD is guaranteed by the FDIC or CDIC for up to $100,000. If you purchase a Certificate of Deposit from a large bank, you probably won’t have to worry about them running out of money any time soon, but it’s always nice to have that extra security blanket.
When purchasing a CD you have a choice between two options, income and growth.
Income CDs pay out interest monthly, which is a great option for people who might need the extra money, or people on fixed incomes such as retirees. Income CDs require a high investment, usually $10,000 or more.
Growth CDs are a much better choice over the long term. Instead of your monthly interest being paid out to you directly, it is invested back into your CD to earn more interest. The minimum investment is much smaller, usually $500 or more.
3)[FONT="] [/FONT]Guaranteed Investment Certificates
A guaranteed investment certificate, referred to as a GIC can be purchased at almost any bank or other financial institution. As the name implies, your investment is again guaranteed for up to $100,000.
The banks near my house offer two main kinds of GICs. The first option is a liquid GIC that you can cash out before the date of maturity, usually with a penalty. The second option is a locked-in GIC which you wouldn’t be able to cash out before the date that it expires, which could range from as short as 30 days, to 10 years or more. Typically the longer you hold your money into a GIC, the higher the interest rate you’ll receive. If you lock-in your money as well, your bank will compensate you for the commitment with extra interest.
4)[FONT="] [/FONT]Money Market Accounts
Unlike GICs and CDs, a money market account is only liquid. This means that you can access your money at any time. There is usually a limit to how many checks you can write against the account every month.
Because the money market account is so liquid, you will normally be given a small rate of interest. This is fine in the short term while you look for new and better investments, but you shouldn’t view putting your money into a money market account as a long term investment. After all, money market accounts usually only invest in short term debt, something I will explain later.
The one attractive thing about these types of accounts is that they are also guaranteed by the FDIC.
5)[FONT="] [/FONT]Money Market Funds
These are simply mutual funds that are managed by professionals. The professional money manager only invests in treasury market securities and commercial paper.
Money market funds are not guaranteed by the FDIC, but the likelihood that your fund will go to zero is very low. I’d be more worried if the bank, or credit union that you invested in goes bankrupt. :smx6:
Some people are not interested in the volatility of the market. This could be based on their time horizon, or just their overall risk tolerance. Regardless of the reason, you owe yourself the gift of wealth creation.
The following are a few investment options that a cynical investor can take in order to increase their wealth.
1)[FONT="] [/FONT]Regular Savings Account
These are the safest of safest investments as they are guaranteed by the FDIC (Federal Deposit Insurance Corporation) or for Canadians the CDIC (Canadian Deposit Corporation) for up to $100,000.
You owe it to yourself to shop around for the best interest rate around. A tool like Compare Mortgage Rates | CD Rates | Credit Cards Home Equity Loans Mortgages Best Rate Calculator Bankrate.com could help you out a lot. They have an easy to use search engine that compares the interest rates of banks across the United States of America.
Remember to inquire about any fees that you might unknowingly have to pay. There’s no point picking the bank with the 4% interest rate when certain fees are involved that will diminish your interest.
2)[FONT="] [/FONT]Certificates of Deposit
CDs usually pay higher interest rates than regular savings accounts, but they come at a price. You will have to keep your money locked in into the CD, until the date of maturity.
If for whatever reason you need to access the money before the maturity date, the bank will typically take away most if not all of the interest you would have received. This is a hard reality to face if you’ve left your money in for a long time and then suddenly need to take it out.
Like regular savings accounts, a CD is guaranteed by the FDIC or CDIC for up to $100,000. If you purchase a Certificate of Deposit from a large bank, you probably won’t have to worry about them running out of money any time soon, but it’s always nice to have that extra security blanket.
When purchasing a CD you have a choice between two options, income and growth.
Income CDs pay out interest monthly, which is a great option for people who might need the extra money, or people on fixed incomes such as retirees. Income CDs require a high investment, usually $10,000 or more.
Growth CDs are a much better choice over the long term. Instead of your monthly interest being paid out to you directly, it is invested back into your CD to earn more interest. The minimum investment is much smaller, usually $500 or more.
3)[FONT="] [/FONT]Guaranteed Investment Certificates
A guaranteed investment certificate, referred to as a GIC can be purchased at almost any bank or other financial institution. As the name implies, your investment is again guaranteed for up to $100,000.
The banks near my house offer two main kinds of GICs. The first option is a liquid GIC that you can cash out before the date of maturity, usually with a penalty. The second option is a locked-in GIC which you wouldn’t be able to cash out before the date that it expires, which could range from as short as 30 days, to 10 years or more. Typically the longer you hold your money into a GIC, the higher the interest rate you’ll receive. If you lock-in your money as well, your bank will compensate you for the commitment with extra interest.
4)[FONT="] [/FONT]Money Market Accounts
Unlike GICs and CDs, a money market account is only liquid. This means that you can access your money at any time. There is usually a limit to how many checks you can write against the account every month.
Because the money market account is so liquid, you will normally be given a small rate of interest. This is fine in the short term while you look for new and better investments, but you shouldn’t view putting your money into a money market account as a long term investment. After all, money market accounts usually only invest in short term debt, something I will explain later.
The one attractive thing about these types of accounts is that they are also guaranteed by the FDIC.
5)[FONT="] [/FONT]Money Market Funds
These are simply mutual funds that are managed by professionals. The professional money manager only invests in treasury market securities and commercial paper.
Money market funds are not guaranteed by the FDIC, but the likelihood that your fund will go to zero is very low. I’d be more worried if the bank, or credit union that you invested in goes bankrupt. :smx6:
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